A research study from Voya Financial revealed a high automatic enrollment default savings rate does not deter participant enrollment, contrary to most employers’ outlooks.

The study, “How Do Consumers Respond When Default Options Push the Envelope?” was conducted using 10,000 plan participants who used their employer’s plan enrollment website. The study suggests that plan sponsors can triple the often-used default rate of 3% without decreasing plan participation.

While Voya researchers consider the automatic enrollment an “effective plan design tool for overcoming behavioral barriers to saving,” the researchers believe the standard 3% default rate for enrollees is far too low to get participants to an effective retirement outcome.

Many employers are reluctant to suggest higher default contribution rates due to a concern that their workers might blindly accept what is not in their best interest, or that they might get intimidated and opt out of the plan altogether,” says Dr. Shlomo Benartzi, senior academic advisor to the Voya Behavioral Finance Institute for Innovation. However, he continues, “No one had researched these concerns using a scientific approach. Would plan participants accept a 7%, 8% or 9% default savings rate? Can we push it even higher into double digits? Through this study, our team found pre-conceived fears were largely unwarranted.”

“By testing different retirement plan saving rates that are shown online to individuals, we have evidence to support that employers should not worry about ‘pushing the envelope’ and suggesting higher default levels,” says Richard Mason, head of behavioral finance at Voya. “Rather, they should be more concerned about rates that are too low to meet future retirement needs.”